A recent FSRP paper provides a wonderful and hard hitting synthesis of the key issues standing in the way of Zambia's agriculture development. It concludes that "despite high volumes of spending in recent years, the return on these investments have been low. Africulture's contribution to the economy is not growing and rural poverty levels remain high". The fundamental reason behind this dismal performance appears to be how Government has intervened. It has largely acted in an incoherent manner, placing political goals at the expense of real sustainable growth. The government's approach to agriculture in the last twenty years has not focused on eliminating real "market failures" that smallholders face e.g. coordination failures, absence of public goods, high transaction costs, etc.
To help address these challenge, the paper proposes, as an alternative to the acephalic status quo, seven major areas that need serious attention to help the agricultural sector and agricultural marketing function better:
First, serious efforts to encourage market development and to ameliorate market failure are likely to require an increased commitment to investment in public goods (e.g., road, rail and port infrastructure, research and development, agricultural extension systems, market information systems) and institutional change in order to promote the functioning of market oriented trading systems. The government needs to prioritize investments in market infrastructure and institutions over private goods and services, as public investment has greater potential to sustain broad-based agricultural growth. This policy would thus require a shift of focus from the fertilizer subsidies and price support systems currently in place to the development of cost-reducing infrastructure. However, care should be taken to focus on infrastructure with a high social payoff, which can be identified through carefully designed cost-benefit analysis.
Second, policy discussions and subsequent decisions need to account for the fact that actual budgetary allocations often differ in significant ways from planned disbursements. Monitoring systems designed to increase budgeting transparency and accountability might provide a method to reduce or eliminate such differences.
Third, in the mixed policy environment, the government co-exists with the private sector as an unfairly large competitor, and this hinders the development of the agricultural sector. While total government withdrawal from the market may not be a realistic or even helpful option, the government should avoid crowding out private sector participation, and should instead seek to facilitate market growth. If, however, the government insists on participating directly in agricultural markets, it should be clear about its intentions to ensure predictability.
Fourth, there is evidence that restricting trade by using discretionary policies such as export bans, import tariffs, and grain levies tends to hurt the market’s ability to deliver food security for all. More empirical evidence on potential alternatives that can avoid these negative effects is required. Recent evidence has, for example, demonstrated that non-tariff impediments to trade exist between Zambia and SADC regional counterparts. An understanding of these impediments and how to avoid them might greatly enhance the government’s capacity to implement effective policy.
Fifth, farmer organizations are generally recognized as valuable instruments for attaining smallholder agricultural development. Because of the inherent diversity in the conditions and needs of these groups, however, no single size organizational mode can be prescribed. Fostering collective action therefore requires an understanding of the varied needs of the clientele and their available social capital, and the coordination of mutually re-enforcing investments by the private sector, the public sector and the civil society. Because of the public good nature of some important investments such as in contracts, technology, and process, the government can actually play a leading role in the desired institutional change. This is contrary to traditional thinking regarding such organizations, which seems to advocate disengagement and a laissez-faire approach. Property rights assurance is also generally recognized as an important ingredient to sustainable collective action. Again, the need for public leadership in spearheading and coordinating investments in the relevant support institutions cannot be over-emphasized. Can Zambia, and other developing countries, learn from the successes achieved by American agricultural producers with the new generations approach to collective action? Although it is not immediately possible to adopt new generation cooperatives, it is worth thinking about such options for the long run.
Sixth, farmer organizations also have potential to make marketing cheaper. While the Tembo and Jayne (2007) study looked at the maize market, there is need to establish the effectiveness of the cooperative movement in other value chains. The cotton sector, for example, has established its own version of collective action and collective responsibility, established with very limited public facilitation or involvement.
Last but not least, in discussing agricultural marketing policy and how it might impact the sector, it is also important to understand the participants and their abilities to respond. A clear understanding of the composition and structure of the small and medium-scale farming community needs to be fully integrated into any efforts to enhance market participation. This will better enable the government to anticipate potential effects of alternative policy actions. There is need for more research to continually monitor the likely impacts of alternative public actions and policies on the target groups, paying particular attention to their varied characteristics, opportunities and constraints. One-size-fits-all policies have, in the past, been shown to be ineffective.